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Investigators from around the world said Thursday they have shut down a fraudulent banking scam that used the Internet to sell fake securities and investments valued at an estimated US$3.9 billion.

At least 10 business and individual cases of fraud have already been identified in connection with the Internet scam, which used fake Web sites to front what investigators believe was a money-laundering scam. Victims were directed to the fake sites to verify and research where investments were going. The Commercial Crime Services unit of the International Chamber of Commerce (ICC), based in the United Kingdom, which led the investigation, said 29 Web sites that facilitated the scheme have been shut down.

While a number of victims have already been identified, John Merrett, the assistant director of the ICC Commercial Crime Bureau said there are likely more victims of the scam that have yet to come forward.

While authorities have not yet charged anyone in the crime, “tens of thousands of dollars” to “millions of dollars” have been lost, according to Merrett. Two arrests related to the scam were made in Switzerland, according to Merrett. But he could not confirm whether criminal charges will be filed against the people arrested. The ICC says that figure could balloon to as much as $3.9 billion based on the value of securities and investments discovered on the fraudulent Web sites.

One company in California, which the ICC would not immediately identify, was pulled into the scam when it was in search of private financing. “They were looking to gain investments into their operations,” Merrett said. “To be honest they were probably not in a very good financial position at the time.”

The California company reported to the U.S. Securities and Exchange Commission a year ago that it had secured $10 million in capital to inject into the company. That investment was later identified to be a scam. “Prior to that they had actually handed over share certificates to a broker,” Merrett said.

Using a so-called pump-and-dump scam the gang leading the scheme managed to boost the value of those fake shares from “a few cents to more than $1,” according to government documents. The company has since turned over the case to SEC. Along with authorities from around the world, the SEC is aiding in tracking down fraudsters believed to be responsible for the scam.

According to the ICC, those responsible for the scam set up four Web sites that simulated securities research pages from Bloomberg L.P. and 25 Web sites that resembled a similar service from Euroclear Bank, an international clearing house for securities and bonds. The sites used domain names including www.bloomberg.50megs.com and www.euroclear30.50megs.com.

Euroclear, a European bank formerly run by investment bank JP Morgan & Co., was spun out as a separate banking entity in January when JP Morgan was acquired by Chase Manhattan. The ICC has contacted both Euroclear and Bloomberg about the counterfeit Web sites. The companies were not immediately available for comment.

The ICC was tipped off about the scam nearly a year ago. “We had additional information earlier about individuals verifying documentation via the Internet, but we didn’t have any details about the URL,” Merrett said.

Following more than six months of investigation, the group tracked the operation to a number of Web sites set up through a U.S.-based free ISP (Internet Service Provider) based in Orem, Utah. The company – 50megs Inc. – shut down the sites within a half hour of being notified by the ICC that the sites were fraudulent. Representatives from 50megs couldn’t immediately be reached for comment.

The ICC’s crime unit has been investigating similar fraud scams since 1992. Although Merrett said the group has seen thousands of cases arise since then, at similar values, this case is important because it represents a more advanced method of fraud.

“This is more worrisome because it involves the mimicking of a legitimate banking business on the Internet and the use of the Internet to verify documentation,” he said.